U.K.’s Davis Rejects Call for Brexit Transition Deal, Memo Says

  • Private note of meeting sets out Brexit secretary’s views
  • May’s office says memo does not properly reflect U.K. policy

David Davis.

Photographer: Chris Ratcliffe/Bloomberg

Brexit Secretary David Davis said he doesn’t want a transitional deal with the European Union to cushion the impact of Britain leaving the bloc, according to notes of a private meeting with business leaders.

Davis said he might agree a transition deal if the EU requested one during negotiations, but is not interested in negative special pleading from companies, according to a record of his Nov. 15 meeting with the City of London Corporation, which runs the capital’s financial district.

David Davis

Photographer: Chris Ratcliffe/Bloomberg

When Davis addressed the possibility of a transition deal, he “stated that he was ‘not really interested’ in the discussion around the arrangements” and “did not foresee any benefits” in the proposal, according to the meeting note, seen by Bloomberg. Davis is concerned the idea of a transition period “could be perceived as a delay to the process,” which is “not something the government can abide,” the document said.

The government sought to distance itself from the claims, contained in a memo written by City of London staff after last month’s meeting, insisting they do not properly represent official policy or the minister’s views.

Despite attempts to downplay the report, the account of the meeting threatens to undermine Prime Minister Theresa May’s desire to keep her Brexit plans secret until formal negotiations with the EU begin next year. Davis’s dismissal of calls for a transition deal echoes warnings from senior government officials, which Bloomberg reported in October, that there would be no special favors for banks.

Cliff edge

In recent weeks, May and her team have tried to appear more sympathetic to the concerns of businesses. On Nov. 21, the premier hinted she is open to a transitional deal to help the City navigate Brexit, telling the Confederation of British Industry she doesn’t want a “cliff edge” departure from the EU.

In the memo, reported earlier on Friday in the Financial Times, Davis was said to be concerned by “an argument that the stability of the EU could be compromised by the U.K.’s ‘sudden’ departure” from the bloc. “The regulatory upheaval and potential for systemic risk could result in serious negative consequences for the whole of the EU,” it said. “He went on to say that if the EU, rather than U.K. stakeholders, want to have transitional arrangements he would be ‘more in favor. I will be kind.”’

Davis “also queried whether the employees of U.S. banks warning of relocating in Europe would actually relocate, given the unattractiveness of Frankfurt and other cities in the EU, in comparison with London. As a result, jobs will go back to New York not Europe,” the memo said.

The prime minister’s spokeswoman, Helen Bower, told reporters in London that the notes are “an interpretation of a discussion - they’re not a proper account of the secretary of state’s view.” A statement from Davis’s ministry said: “He has made clear that the U.K. wants a smooth and orderly exit from the EU, a new partnership that works in the interests of both parties, and is looking at all options to deliver that.”

The City of London Corporation said in an e-mailed statement: “This note was the City’s interpretation of our meeting with the secretary of state for exiting the European Union last month. It was a constructive discussion on the opportunities and challenges that leaving the EU presents to the financial services industry, and how the City can work closely and positively with the government.”

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